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Report: Transformation must happen for Asean to realise digital economy potential

Report: Transformation must happen for Asean to realise digital economy potential

15 Dec 2020

The potential of the Asean digital economy, which is estimated to reach US$200 billion (RM812 billion) in 2025, can only be fulfilled if Asean can carry out a digital transformation.

However, the world, including Asean countries, has been facing the great economic crisis due to the Covid-19 pandemic.

More than 30 million people in Asean are at risk of losing their jobs, and all of the business and economic decisions must be recalculated.

In Indonesia, with its various stages of large-scale social restrictions or lockdowns, users turned to the Internet for solutions to the sudden challenges and changes.

According to Google, Temasek, and Bain & Company in their annual report “e-Conomy SEA 2020” recently, Indonesia’s digital economy is set to expand by 11 per cent to US$44 billion in 2020 from US$40 billion last year, showing resilience amid the pandemic that wreaks havoc on online transportation, food, and travel services.

The pandemic drove internet penetration in the region, with an estimated 40 million new users in 2020.

According to the report, there are around 400 million internet users in total in the Asean region — equivalent to 70 per cent of the total population.

The existence of social restrictions forms a new culture, such as work or school activities from home, resulting in a drastic increase in consumption of digital services.

On the bright side, more new customers use online services in droves, and health and education tech emerged as new frontiers for the country’s digital economy.

Such behaviour is reflected in e-commerce and media, which outgrew the slump in transport, food, and travel.

One interesting point is that Indonesia has 56 per cent of total digital service consumers this year coming from outside the metro area, while the remaining 44 per cent are from around the urban area.

It is said that digital development is currently still “Jakarta-centric”, and this cannot be denied because there is a significant gap between metro and non-metro areas in terms of accessibility to infrastructure.

It also happens in other countries in the Asean region.

President Indonesia Joko Widodo (Jokowi), at the 2020 Asean Business and Investment Summit themed “Digital Asean: Sustainable and Inclusive” in Hanoi, Vietnam last November, said that he also deemed the digital discrepancy as the biggest issue of Asean countries.

To overcome this, Jokowi conveyed three main points that must be encouraged in the use of digital technology in Asean, where the first of it is to ensure an inclusive digital revolution.

The president emphasised that access, affordability, and capacity are the three main keys for digital democratisation. To do that, the digital infrastructure and capacity of Asean human resources need to be carefully prepared.

The second point is — becoming a big player in the digital-based economy and not just a buyer.

The Indonesian President stated that the digital economy must be able to help Micro, Small and Medium Enterprises (MSMEs) entering the global supply chain since MSMEs, which represent 89-99 per cent of Asean’s economy, are the backbone of the economy of the region.

The acceleration of MSMEs digital transformation will encourage the revival of the regional economy.

Third – strengthening synergies to create a conducive digital ecosystem.

The president encouraged the strengthening of regional cooperation to eliminate digital trade barriers, build legal certainty, create synergies in digital trade regulations, and collaborate between the government and the private sectors for regional connectivity.

Source: Bernama

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